Fed Up with Trickle-Down: How Reaganomics Doomed America

The engine of a healthy economy relies on a thriving middle-class majority. The more money the middle-class has the more money it spends, increasing tax revenues. These tax revenues can then be used to reinvest back into the middle-class, such as providing healthcare and college education, which further increases the potential for individuals to prosper. With a college education comes higher wages, with better health comes a better ability to work, both of which result in more tax revenues. Education and healthcare are just two examples.

Naturally the system described above still produces a wealth gap, as some will prosper more than others. There is nothing wrong about that, in and of itself. But to prevent too much wealth/power from consolidating among too few, taxes must increase as a person makes more income. This is called a progressive tax. So yes, a person can still become richer and richer but with that rise in income comes a greater % in taxation which in turn is reinvested into the middle-class, fueling the economy. In this way, everyone benefits, albeit not equally but humanely.

Through this self-perpetuating system, a portion of the growing tax revenue can and should be used to create a safety net for those who don’t excel, regardless of the reasons behind it, ensuring that no one truly suffers. A humane, economic baseline includes food and water so no ones goes thirsty/hungry, basic housing so no one goes homeless, healthcare so no one dies of preventable/treatable illness, and education including college so no one goes without the opportunity to learn. By having such a baseline we increase the quality of life for everyone, reducing crime, drug addiction, poverty, health problems, etc. It’s a fact deducible by common sense that everyone in a society benefits when such issues are mitigated rather than ignored.

But even without common sense, we can prove this works based on history. We tested it nearly a century ago via FDR’s “New Deal” response to the Great Depression. Because income inequality had become so extreme and so much of the economy relied on the stock market, the crash of these markets was enough to nearly topple the entire system. That’s what happens when you put all your eggs in one basket and the basket breaks. The unemployment rate skyrocketed and the middle-class cratered, leaving Americans either rich or poor with little if anything between.

NEW DEAL

The chart above ends in 1946. Below we can see the income gains at the top, middle, and bottom of the economic ladder from 1947-2018. Notice that the long-term impact of the New Deal reforms showed a stabilization of income gains.

Income Inequality

A happier and healthier society is a better society. This is an indisputable reality yet it is still stubbornly disputed by the wealthy and the corrupt who currently hold power. Whether they believe their own lies or not, the 1% continues to romanticize unfettered capitalism, an embracement of economic darwinism in which the survival of the wealthiest is made paramount.

This bastardization of priorities is how they justify bailing out their own criminal enterprises, the corporate Wall Street giants that have increasingly bought our lawmakers in Congress and ergo increased their own ability to shape the laws we all live under. These laws have been changed over time to service only their needs, their desires, their quest for more power.

As the wealthy have continued to embrace their financial fetish, they not only have consolidated their gains but expanded upon it. This perpetual cycle has been ongoing for decades and has only become more difficult to break.

As seen in the previous chart, the lower, middle, and upper classes all became more/less wealthier at an equal rate from 1950-1980. There was an undeniable, documented record of shared prosperity. When we look at the tax rates during that same time period, we can see that the wealthiest were taxed at a rate of 70% to over 90% during this time.

Tax Rates

Those in power try to argue that taxation on the wealthy actually hurts the economy and claim that by giving more power to the top more rapid advances would be made possible, and that this prosperity benefits all. This theory of trickle-down economics, firmly believed and cemented in American policy under President Ronald Reagan, is a proven fallacy. There was a misguided reliance on faith in human nature, perhaps as a result of the religious-right and big business uniting behind Reagan, rather than statistical facts. Trickle-down economics relies on faith that the wealthy will be charitable voluntarily without governmental enforcement. But this discounts the nature of greed and the corrupting influence of money that even the best of people struggle to overcome. Wealth is not voluntarily shared by those who have it. It is hoarded.

Below is another breakdown of the top tax rate, which Reagan radically reduced from 70% at the start of his Presidency to as low as 28%. This is why a significant amount of tax revenue was reduced, meaning less investment in the middle-class. Many of the measures programs that previously provided a baseline of support were gutted as a result. Reagan cut a total of $140 billion from social programs such as food stamps, social security, unemployment insurance, and low-income housing, including the elimination of free school lunches for over one million poor children.

Top Tax Rates

The middle-class was sold the idea that lower taxes on the wealthy was also a good idea because some day they too might become wealthy. But how could a weakened middle-class ever hope to advance? It didn’t make sense then and it doesn’t make sense now.

Still others today will try to argue that raising taxes on the wealthiest isn’t necessary because they already donate to charity. Amazon owner Jeff Bezos, for example, has pledged $2 billion to support homeless families and launch education programs in underserved communities. This, of course, earned Bezos positive press from the corporate media:

Screen Shot 2020-07-12 at 1.13.15 PM

At first glance, this might seem like an example where trickle-down economics is a valid theory. A wealthy man is donating billions to the poor! How could that not be a good thing? What this fails to account for is the fact that Bezos has a net worth of $189 billion, of which $2 billion is a measly 1.05%.  This why it’s important to recognize that the % being donated is far more important than the amount being donated and far less than actually imposing higher taxation on the wealthy.

And how much has Amazon paid in income tax? In 2018, Amazon posted income of more than $11 billion, but paid $0 in federal taxes. In fact, thanks to tax credits and deductions, Amazon actually received a federal tax refund of $129 million. Same deal in 2017, except they received a $137 million refund. It sure makes it easier to become a wildly successful company when you barely have to pay any taxes, isn’t it?

Amazon Taxes Paid

This is a common trend of the corporatists, the wealthiest among us. Corporatists donate to charities and are praised by the corporate media. While these donations undeniably accomplishes good, it’s a drop in the bucket to what could be accomplished. In affect, the $2 billion Bezos donation is actually marketing to protect his reputation. It’s difficult to criticize someone who pledges that much money to preschools and the homeless if there isn’t any analysis of the bigger picture.  

 
What we need isn’t for a select few to monopolize wealth, but for wealth to be more equitably shared. Humanity has the most potential when the collective is allowed to prosper, as it did from 1950-1980, rather than allowing a handful of wealthy gatekeepers at the top who control it all. The middle-class is so distracted by the charitable donations of millionaires and billionaires that they fail to recognize that the % is so limited that it isn’t so much charity as it is a bribe to maintain the rigged financial system.
 

If Reagan had been right, then surely four decades worth of trickle-down economics would have yielded positive results by now. It’s been in place long enough to draw a definitive conclusion and erase any debate. Does flooding the wealthy with more wealth raise all boats?

Of course not. But to illustrate this beyond any doubt, take a good look at the chart below. The bottom 50% of Americans shared only 13% of the total income while the top 1% alone shared 20%. 

Income Inequality 2

At the same time that taxes on the wealthy and investments in the middle-class have decreased, military spending has skyrocketed.

Defense_spending

Factoring in all of the above, here are a few alarming statistics that have resulted from the “success” of trickle-down economics in America and the prioritization of military spending:

21,000,000,000,000 total in net worth gained by the top 1% since 1989 (LINK)
6,400,000,000,000 total dollars spent on the “War on Terror” (LINK)
1,560,000,000,000 total dollars in student loan debt (LINK)
900,000,000,000 in net worth LOST by the bottom 50% since 1989 (LINK)
434,000,000,000 increase in net worth of American billionaires during pandemic (LINK)
175,000,000,000 cost to eliminate poverty for 40 years in America (LINK)
87,000,000 Americans uninsured or underinsured (LINK)
12,775,578 individual (non-business) bankruptcies 2006-2017 (LINK)
567,715 homeless Americans (LINK)
170,000 dollars for a single MOAB bomb (LINK)
111,562 homeless American children (LINK)
26,172 bombs dropped by U.S. forces overseas in 2016 alone (LINK)
11,100 median net worth for Americans under 35 (LINK)
22 veterans commit suicide daily
3 wealthiest Americans own more wealth than the bottom 50%
Measures for the middle-class to effectively resurge and save the larger economy must include:

Medicare For All
Rent Relief / Mortgage Relief
Universal Basic Income (UBI)
Living Wage ($20+ per hour)
Federal Jobs Program
Ending Regime-Change Wars
Affordable Housing

Expanded Social Security
Tuition-Free College
Student Loan Debt Forgiveness
Credit Card Debt Forgiveness
Ranked-Choice Voting
Public-Funding of Elections
Paper Ballots

Our “leaders” in both Parties and in the White House are not interested in any of these vital steps and the very few who do express no urgency in implementing them despite the ongoing pandemic and deepening economic depression. Without even providing healthcare to all Americans after four months of the coronavirus spreading across the country, we can deduce that the required steps for fixing the economic crisis will not happen any time soon, not under Oligarchy. These fiscally responsible and moral programs are not a legislative priority for the ruling Elites. Trillions have gone to Wall Street instead, continuing the blind pursuit of trickle-down economics, the very theory that got us into this problem in the first place.

The sooner we overthrow the U.S. Empire the better and less bloody things will have to be. While influenced by corporations and intelligence agencies, these are the handful who run the U.S. Empire:

535 members in the Senate/House.
9 Supreme Court Justices.
15 members of the Cabinet.
1 Vice President.
1 President.

561 people are truly running our country of 330 million. Why we haven’t just killed them yet is beyond my comprehension. Surely it would be worth removing a few hundred political leaders by any means necessary when the stakes are so high and there is so much catastrophic pain that could be prevented from unfolding. A true Revolution in the streets is something that needs to be more openly discussed not just because it’s the fastest way to save our country and our species, but because it is the only option left. 

Revolution is morally justified and objectively necessary. #REVOLT

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